nonprofit board organization

Legally the board is required to ensure that the organization accomplishes its goals and has a sound strategic plan and doesn’t get into legal or financial issues. The way in which boards fulfill their responsibilities varies greatly and is highly dependent on the circumstances.

A common error is that boards are too involved in operational matters which should be left to management, or that they aren’t aware of their own legal liability for the decisions they take and actions they take for the benefit of the organization. This confusion is often caused by not keeping up with the ever-changing demands on boards, or the unanticipated problems like financial crises and resignations of staff. Most of the time, this can be solved by having a discussion on the challenges faced by directors, and by providing them with instructions and a simple set of documents.

Another mistake that is common is that the board is able to delegate its authority and decides not to review the matters it has delegated (except in the most small of NPOs). In this scenario the board is unable to perform its evaluation function and cannot assess whether the operating activities are contributing to the satisfactory performance of the company.

The board should also create a system of governance that includes how it will work with the general manager or chief executive officer. This includes determining how the board will be scheduled to meet regularly, how members will be selected and removed, and how the board will make decisions. The board must also establish information systems that provide valid information about its past and future performance to help in its decision-making.